There is no doubt about it. SaaS is my ballgame. I love this business!
Software-As-A-Service, Software+Services or Application Service Providing (ASP) – is a business and a market! No doubt about it:
- Pizza boxes are exchanged with fine French dinning
- Cola are exchanged with Amarone
- Late hours are exchanged with even more work
- And the small field trips are exchanged with international business travels
To engage as a real SaaS player at this point of time, I recently made a calculation to prove a business plan. The immediate capital demand to ensure a spot in the market place is around USD $1-2 mio. and additional to this – 10-15 people. To become a SaaS player with a given footprint, end an exit-possibility within 2-3 year, you would have to invest in internationalization of the company profile within 1-2 year, and you would need substantial success and awareness on your product offerings.
Many adopters of the SaaS model are eager to ensure correct technical platforms, control panels and huge investments in fine, fine, fine servers, storage and certified/approved infrastructure. To start a SaaS company today, I would rather hire a big-shot business guy, that a technical geek. The market is a business and not an innovative platform, and you have to move from a prize-centric point of view to become a product/marketing, with a unique business opportunity and extremely well founded support for your end-customers. IDC released a report, showing that 80% of customer churn in SaaS are prevented by substantial and understandable support from a business angel – not a technical angle, as the market matures.
This will require a positive cash flow, lots of new investments – and this proves that fact, that entering the SaaS market, you cannot win by pricing. Differentiate your solution by segment, opportunity and products.
Segment, segment, segment – then target and execute!
Vendors are currently looking to the magic ball to see the next move on SaaS. Microsoft and Google are competing very aggressive to ensure their part of the market cap, but strangely IBM, Oracle and infrastructure vendors as Dell and HP are being patient. Their move is not to see, at the moment – but rest assure their look very hard to find their sweet spot in the marketplace.